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From the beginning, interpretation of dreams has been an integral part of psychoanalytic psychotherapy. Nevertheless, it is still not clear how exactly dreams are related to psychopathology of the patient and the topics and course of therapy. This article aims at providing an empirically supported theoretical model of how dreams are specifically related to psychopathology, the topics that are focused on in psychotherapy, and the general course and results of psychotherapy. On the background of the findings of empirical and clinical dream research, the methodology of Structural Dream Analysis is presented which has reached the point of formulating a theoretical model which explains the relations between dreams and improvement gained in the course of psychotherapy. The core concept that was found is a hierarchical typology of dream patterns which are characterized by different levels of agency of the dream ego representing the extent of ego strength of the person. The central hypothesis contained in the theoretical model of a correlation between a rise in dream ego agency parallel to improvement in psychotherapy is statistically tested and found to be confirmed. The methodology of Structural Dream Analysis has the potential to inform future research but can also be used in assessment and clinical practice in the field of psychotherapeutic dream work.